Sunday, July 29, 2007

After reviving KMC and KCC Kenya Govt goes after Rivatex

Students gathering outside Moi University's Students Center. The Eldoret-based institution of higher learning has forwarded a proposal to the Government of Kenya (GoK) with a view to purchase the assets of the now collapsed RiftVallet Textiles (RIVATEX) for training purposes.

WHAT led to the infamous collapse of Rivatex, Kenya Meat Commission and Kenya Cooperative Creameries? Will the real culprits ever be brought to justice? For how long will a small section of Kenyans be allowed to build “mega” empires – both business and political – from cash stolen from public utilities?

These and more others are some of the burning questions in the heart of millions Kenyans who faithfully meet their tax obligations as it is due. Time has come to prosecute and convict those who, in the past and present, have made it practice to build chains of business entities by siphoning public investments.

The current Government has done a commendable job to revive “dead” utilities and the general economy at large. But prosecutions for those behind the collapse of such entities should be the ultimate – lightly put: “the shedding of blood must precede clemency”. It is disheartening to the public that in its five years of existence the Government through the Kenya Anti-Corruption Commission (Kacc) has not convicted any individual in connection to the collapse of public enterprises.

The glory days of companies such as Mount Kenya Textiles (Mountex) and Kisumu Cotton Mills (KICOMI) are still clear in our minds. But nothing could have brought back to our minds the thought of those memorable days than the recent announcement by the Government that plans are well underway to revive the once vibrant Rift Valley Textiles (RIVATEX).

According to Trade and Industry minister Dr. Mukhisa Kituyi, RIVATEX will be brought back to its feet as part of the Government efforts to fast-track revival of textile factories. Though nothing is in public domain to confirm such resolve, there are reasons to believe Dr. Kituyi’s sentiments.

One, he is a senior member of President Mwai Kibaki’s Cabinet. Second, the eloquent legislator has never been known to make not-well-thought-out public pronouncements. Third, his remarks appeared somewhat coincidental. The minister had just arrived from a high-level summit in Accra, Ghana whereby he led the Kenyan delegation to the 6th US-Sub Saharan African Growth and Opportunity Act (AGOA). The Agoa Initiative, launched in 2000, allows duty-free entry to the United States for most exports from Kenya and 35 other sub-Saharan countries. Kenya will host the 8th AGOA forum.

Much of the paper work has been done, said an optimistic Kituyi. “We have evaluated bids and it is just a matter of time before the firm (RIVATEX) re-opens”. Industrial and Commercial Development Corporation (ICDC) is among the debenture holders for the collapsed firm.

One school of thought agues that Rivatex began experiencing difficulties in the early 1990s as a result of market liberalization with the advent of the IMF-instigated Structural Adjustment Programmes (SAPs) that led to a rise in importation of textiles and rising fuel costs, prompting many homegrown companies to close shop. The factory used to sustain the lives of over 8,000 people in the locality.

But another school argues and points a finger at unscrupulous businessmen with close ties with the State and politics of the day as the real cause behind the downfall of the once vibrant miller.

By the time it closed, Rivatex consumed 2.8 million kg of cotton, 550 million kg of polyester, 16 million KWh of electricity, 20,000 tonnes of firewood. The factory supplied textiles to State institutions such as schools, the military and police as well as bedding and clothes for the tourism industry.

During the period the Kenyan textile industry in general virtually collapsed under the weight of cheap textile imports. According to the Kenya Tailoring and Textile Workers Union (KTTWU), 87 textile factories have folded since 1990 as a result of import dumping.

MoiUniversity and two foreign companies are among institutions competing for the acquisition of the assets of the Eldoret based firm, whose property the institution says it would use for training. Two other companies - from South Africa and Holland - are reported to be the front-runners seeking to purchase the firm, which collapsed a decade ago.

It all began well after independence when the textile industrial sub-sector was identified as one of the activities that could help bring about rapid economic development to the young republic. As such, it was classified as a core industry and granted official Government protection. Under this policy, there was a rapid investment in the sector, raising the number of weaving mills from six at independence to 52 in 1983, with an installed capacity of 115 million square metres per annum, along with 110 registered large scale garment manufacturing units. This made the sub-sector the second largest manufacturing activity after food processing.

According to a position paper on textile industry published in 2001, the Government had made a raft of proposals on how best to revive the sector.

Among the suggestions made was the need to enact an Industrial Development Act that would empower the Minister responsible for Industrial issues regulate and govern activities within the industrial sector.

Second, it was proposed that the stalled Hola and Bura irrigation in schemes be revived as well as step-up the establishment of textile Incubator units targeting textile Engineering students - These would be fully equipped small scale textile production units that would enable the fresh graduates develop their business foothold in the sub-sector even as they build up their capital base. These beneficiaries, the paper suggested, would be there for no more than five years, when they would move out to establish their own enterprises.

Still the Government committed itself to embark on a marketing campaign such dubbed, “Buy Kenya, Build Kenya” whilst promoting equitable pricing structure on goods made in Kenya.

Other proposals were: lowering of power costs and improve the road network in the country, formulate export promotion incentives in line with other countries in order to remain competitive internationally, that the Export Promotion Council (EPC) in conjunction with the private sector should adequately represent Kenya at all major textile Fairs in the world.

Finally, the Government suggested that clear-cut policies should be formulated and implemented to reduce interest rates and that parliament should come up with a strong anti-dumping legislation.Ends...